Qantas Airways Business Strategy - Analysis and Recommendations | Desklib

This report analyzes Qantas Airways' business strategy and provides recommendations for the next five years.

Business Strategy
Business Strategy
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Business Strategy
Executive Summary
Qantas Airways are one of Australia's famous national airlines. This is Australia's one of the
largest airlines and the world's oldest operating airline. The headquarters of the airline Qantas is
in the suburb of Mascot, Sydney. This report basically presents Qantas Airline services as a
blueprint. This report will describe Qantas airlines ' front and backstage functions. This report
will include the view of the airline company's "moments of truth." The company will show the
airline company's satisfaction or dissatisfaction. Since 1920, the company has been operating in
Queensland and Northern air services. Qantas is now a world - famous long distance airline. The
company's vision is to be the world's best airline and low - cost airline. This report examines
Qantas' business strategy and, based on analysis, the organization's proposed strategy for the next
five years is also discussed in this report.
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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................3
Business-level strategy....................................................................................................................3
Past and present geographical external environment...................................................................7
Qantas' business level strategy.....................................................................................................7
Recommendations..........................................................................................................................10
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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Business Strategy
Introduction
Qantas was referred to as biggest Australian airlines that connect more than 1,100 destinations
worldwide. It has a partnership with over 30 airlines. The Qantas first Aircraft was launched in
1920 and has since become a leading brand. Qantas has a few leading brands that are operating
in the regional, domestic as well as international category of passenger & freight, in-flight
catering moreover travels operations, i.e. Qantas freight, Qantas Holidays, Qantas frequent flyer,
Jet Star, Q – Catering as well as express the ground handling. It employs almost 30 000 people
from over 50 nationalities who speak 40 languages.
Vision: Qantas Airlines ' goal was to create a premium and low- cost airlines. Qantas Airlines
was known for its own world-class integrity and honesty and regulatory compliance.
Mission: Qantas aims largest Australian airlines that connect more than 1,100 destinations
worldwide. Qantas ' world-renowned customer services, service plans and customer engagement
plans with efficient sales and distribution strategies help them to achieve long-term success.
Business-level strategy
Current Position of Qantas
Qantas is currently identified as best aviation airlines with the most excellent safety comforts and
measures. Qantas airlines ' products as well as services are world - renowned and recognized as
price value. The airline has now made an overall revenue of $5835 in domestic operations and
$5547 in international functions or operations (Bose, 2010). There is a steady increase in
passengers and airline revenue. The airline competes with its diversification strategy and
provides its customers with valuable services (Qantas Airways, 2017).
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Business Strategy
Qantas's primary corporate and business strategy is rebalancing. The value of Qantas ' growth
strategy is mainly accepted by the level to which Qantas airlines business management is of great
importance compared to its rivals. Qantas ' powerful corporate strategy helps airlines generate
huge returns and offer a more competitive advantage over their competitors. The airlines have
adopted a diversification as well as outsourcing strategy to achieve additional competitive
advantages and save increased operational overheads. With these techniques, the percentage of
client loyalty related to airways is steadily increasing (Becker, & Albers, 2009).
The organization has also implemented the acquisitions and mergers corporate level strategy.
This helps to increase stakeholder value. There are many benefits associated with the mergers
and acquisitions corporate strategy, including diversification, administrative synergy, removal of
competitive risks, market successful integration. In 2016, Qantas adopted a strong strategy with
string mergers and a vertical expansion with this merger. With this merger, huge profits and
growth were recognized in the company (Qantas Airways, 2017).
Companies must develop their growth strategy based solely on how their services are deployed
to stay competitive in a particular region or market segment. This helps shape the company's
strong plan to achieve its commercial advantage. The other most important factor in a successful
business level plan or strategy is the understanding of the passengers and customer value
proposition (Handlechner, 2008).
1. What will the proposal be in terms of product and customer satisfaction services?
2. To which client segment the service or product will be served?
3. How will the company use its basic competencies to meet the customer needs?
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Qantas also use NPS plan to understand whether their passengers will support them. The
information is transferred to frontline staff to improve business processes and is utilized by the
company to inform business decisions as well as improve the travel experiences (Boone, &
Kurtz, 2012). In order to create a competitive advantage, companies can assess different business
techniques that can also match company action and strategies:
 Cost management: low cost every unit production of a product.
 Focus strategy: Production of goods and services to meet a certain customer segment.
 Differentiation: Production of goods or services at acceptable prices producing unique
quality products in the industry.
Competitive advantage development or growth takes place when companies create real value for
their products that surpass the costs of the company. Value is just what buyers want to pay
moreover the higher value comes from offering extremely low prices than the competitors with
corresponding benefits and offering unique profits exceeding the higher price. There are basic
types of viable advantage: cost leadership as well as differentiation (PASH, 2016).
Qantas and Porter's five forces
Qantas resolved the problems faced by Porter's five major forces and their business level
strategy:
Competition among existing competitors: Large-volume competitors in an aviation industry
generate fierce competition among them, among which the competition is strong because of
fierce market competition. Competition Through the price wars, usual and long-term discount
cycles, regular additions of new products, extreme marketing campaigns as well as service
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improvements to reflect that Qantas has developed and maintained a variety of unique products,
thereby gaining a competitive advantage among competitors.
Buyers' bargaining power: Most buyers are mainly middle-class or business professionals in the
aviation industry. They have significant purchasing power as they are free to move between
airlines. Qantas Buyers can with no trouble hold multiple frequent customer loyalty accounts;
therefore this does not make buyers loyal to products or services (Gardiner, 2015).
Supplier bargaining power: Qantas is a globally recognized brand. In the past two years, Qantas
has worked with various suppliers to reduce costs and save current profits. Most other aviation
industry suppliers not important moreover operate in a highly competitive environment. Unlike
the other competitors, Qantas airlines rely heavily on the unionized labor to simply run its
business. The union has significant influence moreover power on Qantas as a major resource
supplier. (Bendapudi, & Leone, 2008).
Potential new entrants: Aviation industry has high entry barriers due to the need for large sources
of funding and access to markets. Many of the market's airlines (from big national operators to
small regional operators) have experience of low-profit margins (because of constant price
competition along with price reports) and jet fuel fluctuation in the industry. Enables the industry
to be very harmful to successfully enter new entrepreneurs and compete with existing operators.
In addition, Qantas has also developed a very successful loyalty plan that has become more
complicated to help the brand maintain its customer base and maintain new entrants (Greatbrook,
2016).
Product Substitutes: The main alternative to trains and highways, however, with a significant
reduction in prices (where domestic airline tickets might cost less than taking a taxi to the
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Business Strategy
airport), the aviation industry will be capable to prove significant (saving time, comfort,
convenience) Qantas' comprehensive cost leadership/differentiation strategy (Bhattacharya, &
Korschun, 2008).
Past and present geographical external environment
Qantas need to develop a basic capability that integrates horizontal acquisitions and establishes
businesses outside of Australia. External marketplace trends have shown growth in Asia as well
as in Africa, and Qantas must be near the market to provide new customers with the main
competitiveness of their security records. In New Zealand, Qantas has repeatedly claimed that
Emir Tasman is only reducing their ability to reduce fares to reduce their profits and margins for
the competitors in the market. Another issue in the relationship with Australian Airlines relates
to the imbalance of interests brought about by air service agreements, the benefits of which are
largely favored by the Emirates. Qantas complained that the operations of Sixth Free Airline -
Singapore Airlines and Emirates Airlines - led to a sharp decline in its share of international
passenger traffic to and from Australia (Ertr.tamu.edu, 2015). However, given that Qantas still
needs the fifth freedom to get business outside of Dubai; this may be an empty gesture. As a
fourth free airline, Qantas likewise complains that Emirates has only transferred traffic, but more
than 80% of Emirates' current passengers entering and leaving Australia are to and from
Australia without flights, such as Zurich, Paris, and Vienna (Beard and Dess, 2011).
Qantas' business level strategy
Qantas’ main corporate or business level strategy is diversification. Qantas' business strategy
value is mainly reflected in the degree to which Qantas business management has greater value
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than its competitors. Qantas' strong corporate strategy helps airlines achieve substantial returns
and offers a greater competitive advantage than their competitors.
Airlines use diversification and outsourcing strategies to gain additional competitive advantage
and save on increased operating costs. Through these strategies, the percentage of customer
loyalty associated with airlines has suddenly increased.
The organization also implemented an enterprise-level acquisition and merger strategy. This
helps to increase the value of stakeholders. The corporate strategy of mergers and acquisitions
has several benefits, for example, diversification, operational synergies, and elimination of
competitive risks, expansion as well as the growth of the market (Harrell, 2008).
The strategy adopted by Qantas can also easily identify evidence of strategic leadership. Alan
Joyce recognized the airline internationally through an international strategy or plan. Alan Joyce
uses the global expansion technique to further develop its business. The airline began to expand
by expanding its roots in Asia. The Asian market has lower entry barriers and greater
competitive advantage, which provides opportunities for airlines to conduct business overseas.
The use of airline transportation facilities is less competitive and has a larger domestic
population. All of these relevant elements contribute to the Qantas' success in global corporate
strategy.
The outsourcing strategy has also been very successful; as labor is available at low prices in
overseas countries moreover knowledge and skills have improved. This helps them to lower
prices and gain a competitive advantage. Outsourcing is also a very successful plan, mostly in
developing countries, because they have a large workforce and they are looking for work. This
reduces costs for the company to perform business operations(Mickhail, 2012).
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Business Strategy
The company is looking for a merger and acquisition in many departments to increase the value
of stakeholder of acquiring the company. The reasons include the growth, market expansion, and
removal of competitive threats, the operational co-operation or diversification. However, obvious
benefits are obvious, but due to the lack of effective corporate policies, acquisitions have reduced
the value of the shareholder. Only 45% of acquisitions achieved their strategic target in 2014,
49% of acquisitions achieved their financial goals and only by "continuous mobilization
engagement" to achieve at the operational level.
Strategy and culture
Culture is a series of beliefs that drive employee behavior. These refer to the behavior of
employees based on these potential beliefs. It can be seen that these strategies are consistent with
business strategy and will lead to organizational success in the long run. For Qantas, providing
customers with world-class service is the main motivation. Therefore, Qantas' training programs
focus on how to provide convenient flights for all passengers (Augustine, 2013).
Competitive Strategy
Qantas stand in domestic and global markets. It is estimated that internal resources should be
integrated with business policies to overcome unwanted situations. On the basis of the major
achievements mentioned in this report, competent employees can see Qantas's competitive
strategy. Qantas employees are customer friendly. Qantas management recognizes the
importance of excellence in customer service in the aviation industry. Qantas motivate the right
people to hire and train them as well as possible. A good infrastructure, world-class flight
experience, can also be called a competitive strategy. It provides the best flight experience and is
sponsored by "Australian Premium Airlines". Consumers also actively participate in the CSR. He
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has a charitable faith which includes contributions for the community welfare or for the welfare
of society.
Recommendations
The analysis has recognized the supplier's bargaining power as a major threat. Qantas airlines
main operations staff has joined the union; work has been reduced to outsourcing, and the
continuous reduction in work has scared the union. This caused a major strike in 2015 due to
over 300 cancellations and loss of brand reputation. It is proposed to establish a close
relationship with the Union to reduce the chances and impact of future strikes affecting
company's gains and reputation. Establishing a corporate contract, which includes increasing
employee costs, is crucial to maintaining the airline's profitability and competitiveness. Kwantas
must continually monitor and respond to potential market splits. Travelers using Jetstar can take
advantage of less rent and can damage the brand. As a result of Jetstar's introduction of low-cost
options, Qantas reported decline in its major product sales. This strategy affects sales volumes
and market share, so that the value of premium service quant product can be reduced. Founded in
early 2014, the Red Planet is a subsidiary of Qantas Loyalty Analytical Consulting Services. The
main aim of a new business unit is the advantage of frequent flyer and transaction data, which
enables consumer insight to create the leading digital media, analysis and research services
business. In order to improve the capacity and experience of this sector, Qantas bought Taylor
Fry in February 2015. For the financial year 2014 the company's revenue was $12 million, which
came from the analysis of early information data (Beard and Dess, 2011). The 27-year
experience of analyzes of Qantas’s loyal data and the basic reason for diversification emphasizes
the strong coordination between CEO Martin Free Qantas Loyalty and Taylor Fry. In the cargo
business, Qantas must further strengthen the cooperation between aircraft resources and logistics
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with the horizontal acquisition of compatible aerial carrier operations while pursuing further
growth and market forces. Due to the increase in revenue, the cost efficiency of the opportunity
economy and the next acquisitions can increase significantly (Berriman and Martin, 2002).
Potential takeover targets may include the use of international objectives for the distribution of
foreign aircraft. A comprehensive assessment of acquisitions should be done to determine
quantitative synergies. First, the company needs to determine where the problem is in the
service. The main problem in the service may lead to customer dissatisfaction. It involves
identifying problems and solving them quickly (Aksoy, Groening, Keiningham, &Yalçan, 2008).
There may be issues such as quality, price, employee behavior, aircraft services, booking
services, website errors, etc. Companies need to identify these issues in order to provide better
quality of service to their customers. Companies can adopt strategies such as communicating
with customers to solve problems. Communicating with customers will help the company
improve customer satisfaction (Adair, 2011). Communicating with customers includes providing
feedback and explaining the reasons behind the failure of the service. The reason for notifying
the service failure will ensure that the customer understands the company's loyalty to the
customer. It will also ensure that customers understand the actions taken by the company to
restore personal and professional services. Qantas also regrets the failure of the service. An
apology can increase the company's image in front of customers (Mickhail, 2012). At the same
time, companies can provide tangible payments, discounts and coupons in front of customers to
increase customer satisfaction. Employees should be trained to overcome service failures
because service recovery depends on action, decision making and employee judgment.
Therefore, it is important that companies train their employees to get service recovery
capabilities (Adcock, 2010). Staff training should include ensuring that customers facing facility
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and service issues manage and respond to customer responses in the face of service issues,
empowering and motivating employees in times of crisis, and paying attention to employee
satisfaction and customer satisfaction. These training sections will help the company recover
from problems in the service (Aaker, 2010).
More advice can be given to Qantas Airlines to compete in global markets and face a variety of
crisis as well as competitive business environments (The Australian, 2015). Qantas needs to
continue their international approach so that it can develop a variety of the regional business
units. A transition approach can also be used when expanding its operations in overseas
countries. Qantas has the opportunity to capture the Chinese and Indian markets through regional
strategies because of the need for local and regional responses. Traveling abroad is a big trend. If
company meet local and regional needs and successfully accomplished it, this can ultimately lead
to business and growth of the aviation industry (Peters and Casey, 2005). To reduce working
costs, Kent should focus on developing an energy-efficient aircraft. Fuel cost is a major portion
of the airline's total expense and it is necessary to manage by various strategies so that the
aircraft companies can get a competitive advantage from competitors. Since Qantas extends the
long-term international business, Qantas has to increase the cost-effectiveness of the next
generation B787s by changing the speed of the next generation fuel economy aircraft. The total
cost of the company's fuel costs is more than 35% of the total cost of the quanta. The company
reduced its fuel cost by $ 500 million in 2016 due to lower fuel costs than FY2014
(Qantas.com.au, 2015). Qantas must review its network as well as schedule it to deliver the
aircraft again on the basis of performance growth. In view of this, future fuel prices can reduce
Qantas due to uncertainty. Few proposals can be offered to Qantas Airlines to compete in the
global marketplace and face a variety of crisis and competitive business environments over the
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next five years. Qantas needs to continue its global strategy so that it can develop a variety of
regional business units. A transition approach can also be used when expanding its operations in
overseas countries. Qantas has the opportunity to capture the Chinese and Indian markets
through regional strategies because of the need for local and regional responses. There is a great
tendency for individuals to travel abroad. If it can successfully meet the needs and needs of local
and regional individuals, this can ultimately bring business and growth to the aviation industry.
Qantas must also focus on developing energy-efficient aircraft to reduce operating costs. Fuel
costs are a major part of the airline's overall cost and need to be managed through a variety of
strategies so that airlines can gain competitive advantage from competitors (Agrawal and Lal,
2007).
Conclusion
Qantas is able to work effectively for almost 100 years. Strong and appropriate strategic
management methods along with enterprise level strategies enable the airline to maintain the
high revenue and increase their customer base. Different strategies such as international
expansion strategies, acquisitions as well as mergers, and diversification strategies help airlines
increase awareness in an aviation market. Competitive scenarios and globalization will continue
to build internal and external environments and competitiveness, which will force the
relationship to develop strategies that will help in solving the changes. These strategies are
linked to the mission and vision of the airline, which contributes to achieving security and
increasing the long-term goals of the customer base. The airline's corporate strategy helps the
airlines achieve high revenue and value creation. Airlines have also experienced horizontal
moreover vertical expansion through various business strategies. The main reason for the
development and success of airlines is proper strategic management.
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